Here we are going to look at one of the best forex trading strategies which you can use to make big profits. This forex strategy is simple to understand, works, will continue to work and finally and best of all, it can make you triple digit gains in less than 30 minutes a day …
Many traders want to buy a forex trading system and end up buying useless for automated trading systems which are simply back tested simulations – in simple terms that means made up, knowing the closing prices. Well that's not hard trading not knowing of course is and is the challenge of forex trading.
Now, many traders think building a system is hard but its not anyone can do it and it also does not have to be complicated as simple trading systems work best and always have.
The salient points of a simple robust system are enclosed.
The forex trading methodology which is easy to understand is breakout methodology.
Fact: Most new trends start from new market highs or lows and if you go with them, you can get in on all the major trends and pile up big gains.
Not all breakouts are the same because and you must make sure the resistance or support has been tested several times, it's been tested in several different time frames and the market considers the level important. If it breaks that means the break will continue.
Most Traders Cant trade Breakouts!
Most traders can not trade breakouts, because they want to get in at a better price and wait for the pullback but a look at any forex chart shows – when a big break occurs the price does NOT pullback.
The trader who waits continues to wait as the trade sails over the horizon piling up thousands or tens of thousands of dollars and their not in!
Going with these breaks is the way to make money and history shows it works.
Trading breakouts is not predicting, it's simply reacting to price change and when a breakout occurs, you need to confirm the break and check if price momentum is accelerating – if it is you can enter with the odds on your side.
For this you need some momentum indicators to confirm the move.
We have discussed these more fully in our other articles but here, we just want to stress that velocity of price MUST be accelerating, to have the odds on your side when you execute your trading signal.
Two great indicators are the RSI and the stochastic so look them up or see our other articles.
Money Management and the key to Triple Digit Gains …
Placing your stop is easy – behind the breakout point, the hard part is trailing the stop.
If it's a valid breakout, then you may have a trend that can last for weeks, months or years and you need to trail your stop far enough back, so you do not get stopped out of the trade to soon.
The simple fact is you need to give the market room to breathe, or you will never make the big profits – accept short term drawdown in open equity and keep your eye on the bigger prize.
A good way to do this is to wait until the trade is underway and trail with the stop behind the 40 day Moving average.
Simple and Effective
The above strategy is not designed for action, it relies on patience and only picking high odds valid breakouts and you will probably get a few each month.
The system is timeless and any chart will show you breakout trading works and with a simple strategy such as the above, you could soon be making triple digit gains.
It's also easy to understand which means you will have confidence in it and be able to follow it with discipline. In forex trading, discipline and a simple robust method equals currency trading success.